HOA Clarification For California SB 150

Another year, another new law (for those of us in California). Come January 1, 2012 the new California SB 150, a bill which amends Sections 1368 and 1373 of the Davis-Stirling Act came into effect. It adds a new Civil Code Section to the Act affecting certain rental restriction provisions in CC&Rs. Several people have mentioned confusion over this new law.

We asked one of our top notch local real estate attorneys Barrett Schaffer for an explanation of the new law. We asked him, “Can a HOA restrict or set a cap on the number or percentage of units that may be leased at any one time?”

He answered, “No, unless all the owners in the HOA consent.  Any owner who consents is bound by it.  Heirs and new buyers are not necessarily bound by any such all-owner consent.” With these large HOA complexes it’s not likely that ALL owners will consent.

Barrett made a good point that we have to look at who’s behind SB 150, so it’s easier to understand the reasoning behind it and what the rule says.  Apparently CAR lobbied for the law because they did not want HOAs to restrict how many renters could live at a particular Association.  CAR saw that as limiting the number of buyers, since without the law investor buyers would likely be more restricted in terms of the properties they could buy.

The law may affect the ability to banks to lend on a property. Some banks will not loan on condos with a high percentage of renters. Perhaps that thinking will change with this new law.

So the law does not prevent an HOA from making rules relating to tenancies themselves (present or future); it is more limited to the threshold issue of whether an HOA can limit the number of tenancies in the first place.

W-HOA is that good info or what?


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